Article 10 of the Saudi Commercial Papers Law
المادة 10 من نظام الأوراق التجارية · الفصل الأول: إنشاء الكمبيالة
Article 10 makes a person who signs a bill of exchange on behalf of another without authority, or who exceeds the limits of their authority, personally bound, and if they pay it, they acquire the rights of the person they claimed to represent.
Official text (Arabic)
This article has not been amended since the law was issued.
من وقع كمبيالة نيابة عن آخر بغير تفويض منه، التزم شخصيا بموجب الكمبيالة، فإذا وفاها آلت إليه الحقوق التي كانت تؤول إلى من ادعى النيابة عنه. ويسري هذا الحكم على من جاوز حدود النيابة.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 10 explained in plain English
This article deals with a person who signs a bill of exchange as an agent of someone else, for example in the name of a company or a relative, but has no authority to do so.
The rule is that this person becomes personally bound under the bill of exchange, and is therefore the one liable on it to the holder. The reasoning is that he or she created the signature, so the holder's right should not be lost because the person claimed to be represented never authorized it.
Conversely, if this person pays the bill of exchange, he or she acquires the rights that would have passed to the person claimed to be represented had the signature been valid.
The same rule applies to a person who exceeds the limits of the agency, that is, someone who has authority but acts outside its scope.
This rule is consistent with Article 9, which keeps the other signatories' obligations valid despite signatures that do not bind those who made them. In practice, anyone signing for another should make sure of the limits of their authority, and anyone receiving the bill should verify the signatory's authority. In a dispute, a lawyer specializing in commercial cases and commercial papers can be consulted.
Practical example
An employee at a company in Riyadh signed a bill of exchange in the company's name without having authority to sign. Under Article 10, the employee is personally bound on the bill to its holder, and if he pays its value, the rights that would have passed to the company pass to him.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 10 of the Saudi Commercial Papers Law
Who is bound by a bill of exchange signed on behalf of another without authority?
The signatory himself or herself is personally bound under the bill of exchange.
What if the signatory had authority but exceeded it?
The same rule applies, and the signatory is personally bound by the bill of exchange.
What right does someone who signed without authority have if they pay the bill?
The rights that would have passed to the person they claimed to represent pass to them.
More articles on Bill of Exchange
- Article 1
The article sets out the eight particulars a bill of exchange must contain, including the word "bill of exchange", the amount, the name of the drawee, the due date and the drawer's signature.
تشتمل الكمبيالة على البيانات الآتية: أ - كلمة (كمبيالة) مكتوبة في متن الصك وباللغة التي كتب بها. ب - أمر غير معلق على شرط بوفاء مبلغ معين من النقود. ج - اسم من
- Article 2
An instrument lacking the particulars of Article 1 is not a bill of exchange, except where the due date, place of payment, drawee's domicile or place of issue is missing, each of which has a substitute rule.
لا يعتبر الصك الخالي من البيانات المذكورة في المادة السابقة كمبيالة إلا في الأحوال الآتية: أ - إذا خلت الكمبيالة من بيان ميعاد الاستحقاق، اعتبرت مستحقة الوفاء ل
- Article 3
The article permits three ways of drawing a bill of exchange: to the drawer's own order, on the drawer himself, or for the account of another person.
يجوز سحب الكمبيالة لأمر الساحب نفسه، ويجوز سحبها على ساحبها، ويجوز سحبها لحساب شخص آخر.
- Article 4
The article permits stipulating that a bill of exchange be paid at the domicile of a person other than the drawee, whether in the drawee's town or in another.
يجوز اشتراط وفاء الكمبيالة في موطن شخص آخر غير المسحوب عليه سواء كان هذا الموطن في الجهة التي فيها موطن المسحوب عليه أو في جهة أخرى.
- Article 5
If the amount of a bill written in words differs from the amount in figures, the words prevail; if the amount is written several times and differs, the smaller amount prevails.
إذا كتب مبلغ الكمبيالة بالحروف وبالأرقام معا فتكون العبرة عند الاختلاف بالمكتوب بالحروف، وإذا كتب المبلغ عدة مرات بالحروف أو بالأرقام فتكون العبرة عند الاختلاف
- Article 6
Article 6 provides that any stipulation of interest on the amount of a bill of exchange is treated as if it had not been written.
اشتراط فائدة الكمبيالة يعتبر كأن لم يكن.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.